The Credit Crisis Visualized

Yeah, very well described. As a Realtor, I can vouch for the whole darkness at the end. Strange that two short years ago we were so busy, and now it’s like a funeral home out there. One thing that they left out, because it’s a touchy issue, is the government requirements of a certain percentage of minority families getting loans, which added fuel to the sub-primes.

Snake Oil Baron, you are missing that investors are betting home prices will drop a LOT more in the next year or so. The real bargains are for those who wait until things are much worse.

I understand it now!

that was very simple and very nice. i’ve always found the housing crisis interesting since i used to work in the office of a window and door manufacturer.

It’s a bummer that a peppy presentation doesn’t make this all any easier to swallow. Actually it’s really surreal…sort of like a cartoon of our own doom. Nicely done though.

These videos do a relatively good job explaining the issue but they do indeed leave out the CRA (Community Reinvestment Act) and requirements that 50% of all FannieMae/FreddieMac loans be to minorities and that “red lining” was to be prohibited.

Why is that important you ask?

Well, F&F are known as the secondary market. In order to have access to the secondary market as a place to sell the mortgages they were writing the banks had to comply with F&F standards for those loans. F&F, under the direction of HUD drove the standards down so that more people would qualify. Thus, the banks who wanted access to the secondary markets had to comply with those same standards.

Many banks were sued to force them to make loans that they didn’t want to make.

One of the Plaintiffs? ACORN.

One of the attorneys for ACORN? Barack Obama.

The train was on the tracks and moving.

Then, F&F began issuing default insurance on those same risky loans in order to assure the nervous investors who took the mortgages off the hands of F&F.

During the time all of this was going on, the execs of F&F were getting rich. Really, really rich. While they were getting rich they were kicking millions of dollars toward Democrat candidates and the Democrat Party. They were also cooking the books and committing accounting fraud at the same time.

Who were these people you ask?

Franklin Raines, Jamie Gorelick, Rahm Emanuel, and others. The same people who drove F&F into the ground are now acting as advisers to the Obama Administration.

Who was the number one recipient of F&F campaign money?

Chris Dodd.

Number two was Barack Obama.

When F&F collapsed the investors realized that their insurance policies were worthless and they were stuck with time bombs as the videos illustrated.

Add spiraling housing prices to the mix and you have the perfect storm.

It’s a very tangled web but easy to decipher when you start putting it together.

doom doom dooooooooom

Very well made animation that succinctly describes the current crunch we’re in. Of course, just magnify this to a global scale and we’ll have that world wide recession.

Moi,

The video “simplifies” at the expense of a very key piece of information.

The Fed Gov’t forced the banks to make the loans which ultimately led us to where we are today.

Overlooking that is like not seeing the water when you travel to Niagara Falls.

They leave out the CRA requirements in these videos because the CRA provisions were never an issue. The CRA requirements have been the same for years and the only people screaming “CRA’s!, CRA’s!” are people with a political agenda.

The credit freeze did not happen because the banks were lending under the CRA provisions. The problem as these videos have so aptly pointed out was that you had banks giving $300,000 loans to anyone with a 680+ FICO score without even bothering to see if they had a job first. The government did not make them do this. The standards were dropped in the fight for investor dollars. If company A started to offer a NINA loan, Company B had better follow suit or else they would lose out on millions/billions of dollars. It was free market economics 101, and with no one there to regulate lending standards the banks dug themselves deeper with every loan.

People that want to blame the CRA either have no grasp over the economic reality of the situation or they have no problem deluding themselves to promote a political agenda.

Look at the biggest housing busts in the nation, its not the Detroit or Compton markets that are bleeding the banks dry. Its Las Vegas, Long Beach, New York, Oakland, Miami…. these are not redlined areas. There are entire neighborhoods in these city’s filled with foreclosed $500,000 homes. And if you are still in denial look at the foreclosure statistics for redlined districts, low income home loans have only seen a slight uptick in the rates of foreclosures. Compare those foreclosure numbers with the half a million dollar homes in the suburbs… its gets real easy to see where the problem lies.

Don’t forget the rating agencies. IMO they bear the most reponsability for the credit crisis, as well as others like Enron’s.
We need viable, professional and independant ratings, so we’d know what is the risk attached to an investment.

‘ES
February 22nd, 2009 at 7:52 pm

Could Aye Chihuahua give us a visual representation of what he/she just wrote?”

I’d rather not have to look at pictures of scat, thanks. It’s an all too common tactic to paint a situation as a single party’s doing. Lest we forget the implications of the Gramm-Leach-Bliley Act and who was behind the S&L Scandal then that predeeded, but also directly served as a catalyst for, it.

Everyone, and I mean EVERYONE, had their hand caught in a cookie jar. Every. Step. Of. The. Way.

“Free market” greed coupled with Reaganomics economic policies… Or have people already forgotten about what the ‘Ol Gypper did as well?

And the people of the United States, we voted them in.

Everyone is complicit. The people I knew who mocked me for living within my means… are the people who are suffering most now.

James M,

It’s an all too common tactic to paint a situation as a single party’s doing.

Gramm-Leach-Bliley Act and who was behind the S&L Scandal then that predeeded, but also directly served as a catalyst for, it.

“Free market” greed coupled with Reaganomics economic policies… Or have people already forgotten about what the ‘Ol Gypper did as well?

Pot. Kettle.

I have pointed to the facts of the issue. I have not named one party over the other. Just the facts.

You’ve failed to show how the CRA was NOT a factor while I have repeatedly shown that it was.

The “free market” didn’t do this.

Banks were forced to make loans that normal business practices would have prohibited.

The interference of the Fed Gov’t in the free market is what led to it.

Trotter,

I pointed out Obama simply because he was the attorney for the group that sued the bank in the red lining case.

I mentioned Obama and Dodd because they were the number one and two recipients of campaign cash from Fannie/Freddie.

If the number one and two spots had been filled with Rep names then I would have named them instead.

The other names that I mentioned were former employees or board members of F&F.

I didn’t mention their names due to party affiliation on their parts or party loyalty or mine.

To be honest, I despise both of these parties. I believe that they will be the death of this country.

I am simply laying out the facts. Nothing more. Nothing less.

Whether or not the bankers would have come up with sub-primes or some of the other “exotic” ideas is an issue that is subject to speculation.

What is not speculation is the fact that the Fed Gov’t (specifically HUD) forced the lowering of qualification standards in the interest of social engineering.

Realistically, I don’t see the banks willingly doing things to expose themselves to more risk.

By the way, here’s a name I forgot to mention before.

Penny Pritzker.

She was the head of Superior Bank which collapsed in 2001 due to bad mortgages.

What’s she doing now you ask?

Serving on Obama’s economic advisory commission. She was also his campaign finance director.

Don’t you all find it just a little bit disconcerting that the very hands that led us down the path we are now on are now occupying, or have access to, the halls of power and influence?

That’s like asking the doctor who botched your surgery to operate on you again.

Gov’t regulations have a place in business only to the extent that they prevent illegal activity, etc.

Gov’t interference in the private markets lead to problems each and every time that they are tried.

I approach the Free Market in the same fashion that the Founding Fathers did. They believed that the gov’ts only role was to prevent monopolies and ensure competition.

Here’s a NY Times article from 1999 which pointed out the problems which were already evident regarding this issue.

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC 0A96F958260

You indicate that you feel that there was not sufficient oversight during the past eight years. I disagree. Too much oversight and gov’t intervention is what forced the banks to make the bad loans.

President Bush made multiple attempts to reform F&F but each time his efforts were rebuffed by those in Congress who were blowing smoke about the stability of those two entities.

Again, there is no possible way that the people who led us into this tar pit should be the ones who are trusted to lead us out.

I appreciate you taking the time to discuss this issue with me in a rational fashion. So many people here aren’t up to that task.

Your readers might also like a couple of videos Enspire Learning produced last fall:

Understanding the Financial Crisis
http://www.youtube.com/watch?v=gF6LbFDjvW0

The Mortgage Banking Meltdown
http://www.youtube.com/watch?v=HSjEyOp2dEM

When action goes acerbic, no seek, and tax payers are on the claw, label or concealed taxes equal inflation etc. Bankers eff way to bottomless supplying of liquidity (chewy money furnish), and we’re all on the lure, time the banking cartel ensures profits for the banking elite
polo